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Daily Market Commentary - 29/12/2008

Discussion in 'Forex Daily News & Outlook' started by gcitrading, Dec 29, 2008.

  1. gcitrading

    gcitrading Contributing Member

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    29 December 2008, Monday
    Fundamental Outlook at 1500 GMT (EST + 0500)


    EURO
    The euro moved sharply higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4360 level and was supported around the $1.4060 level. Traders lifted the common currency sharply higher following this weekend’s major military action in the Middle East that saw Israel destroy several key Hamas targets. The tension is expected to be ongoing and the euro reacted to major advances in the Swiss franc precipitated by safe-haven buying. The German government reported it will render a decision about a second fiscal stimulus package by mid-January. HDE reported German retailers experienced strong holiday sales, a potential boon to the eurozone’s largest economy. In other eurozone news, French Q3 gross domestic product was up 0.1%, the latest indication that the eurozone’s second largest economy may have averted a technical recession for now. In U.S. news, traders are anxiously awaiting provisional data from U.S. retailers about the holiday shopping period to see if final private demand held its own or collapsed amid the major economic pullback that remains underway in the U.S. Euro bids are cited around the US$ 1.3300 figure.

    JPN/CNY
    The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥89.75 level and was capped around the ¥90.75 level. Finance minister Nakagawa verbally intervened in the exchange rate market saying “The fact is that every day I am looking at the market developments with a sense of alarm and urgency.” Japanese monetary authorities have not overtly intervened in the market since March 2004 but there is a growing sense that action may be taken to slow the yen’s strong ascent. Nakagawa also said Japan is unlikely to draw up another fiscal stimulus package given that the one introduced this month has not yet been enacted.
    The Nikkei 225 stock index climbed 0.09% to close at ¥8,747.17. U.S. dollar offers are cited around the ¥104.15 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥129.70 level and was supported around the ¥127.45 level. The British pound came off vis-à-vis the yen as sterling tested bids around the ¥131.65 level while the Swiss franc gained ground vis-à-vis the yen and tested offers around the ¥86.65 level. The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at 6.8527 in the over-the-counter market, up from CNY 6.8414.

    STERLING
    The British pound moved higher vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.4770 level and was supported around the US$ 1.4570 level. Bank of England data released today confirmed that U.K. mortgage-holders injected more equity into the housing market in Q3 than at any time since at least 1970, adding ₤5.695 billion. Last week, BRC reported U.K. December retail sales “won’t be pretty.” Cable bids are cited around the US$ 1.4470 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.9800 figure and was supported around the ₤0.9585 level.

    SWISS
    The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0420 level and was capped around the CHF 1.0675 level. The franc notched major gains overnight following the ongoing military action between Israel and Hamas that led to safe-haven buying. Israel has stated the action may last for some time and this could lead to weakness in the U.S. dollar, particularly if the action causes crude oil prices to escalate. Data released in Switzerland todays aw the December KOF leading indicator decline for the seventeenth consecutive month, printing at -0.39 from a revised -0.04 in November. U.S. dollar offers are cited around the CHF 1.1160 level. The euro moved lower vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.4925 level while the British pound moved lower vis-à-vis the Swiss franc and tested bids around the CHF 1.5240 level.
     
    #1 gcitrading, Dec 29, 2008
    Last edited by a moderator: Dec 30, 2008
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